What Is A Contingency Fee?
All Massachusetts injury lawyers that handle personal injury cases do so on a contingency fee basis. But what is this exactly? Understanding this fee structure is important if you are dealing with either a personal injury or workmans’ compensation claim.
You may have come across attorney advertisements which say “no fee unless we win your case” or something very similar. That is a contingency fee. The fee owed to the attorney is only triggered, or contingent upon, the attorney obtaining financial compensation for the client.
If there is a settlement or verdict at trial, not only does the attorney collect the contingency fee, but also gets reimbursed for all out-of-pocket expenses advanced during the case.
Typically for personal injury cases the fee is 25%. Some lawyers charge less, and some charge more. The Massachusetts Rules of Professional Conduct require all contingency fees to be in writing. They also set forth considerations used to determine if a contingency fee charged by an attorney is reasonable. Factors used to determine reasonableness include:
(1) the time and labor required, the novelty and difficulty of the questions involved, and the skill requisite to perform the legal service properly;
(2) the likelihood, if apparent to the client, that the acceptance of the particular employment will preclude other employment by the lawyer;
(3) the fee customarily charged in the locality for similar legal services;
(4) the amount involved and the results obtained;
(5) the time limitations imposed by the client or by the circumstances;
(6) the nature and length of the professional relationship with the client;
(7) the experience, reputation, and ability of the lawyer or lawyers performing the services; and
(8) whether the fee is fixed or contingent.
Here is how a contingency fee works. For example, suppose you got into a car accident. You hire a lawyer and the lawyer has you sign a fee agreement with a 33% contingency fee. If at the end of the case the lawyer settles the case for $15,000, the attorney’s would be $5,000. Or, if the case does not settle, or loses at trial, the attorney takes nothing.
Unlike personal injury cases such as car accident, slip and falls, and other injury claims, workers compensation fees are set by statute. Basically, for a case settled with liability (insurer agrees to pay for future medical bills) the fee on a lump sum settlement is capped at 15% of the total settlement. For cases settled with liability (insurer agrees to pay for future medical bills) then the contingency fee is capped at 20% of the total lump sum settlement.